Romag Fasteners, Inc. v. Fossil, Inc.

• Decision Date: 09 August 2017
• Docket Number: 2016-1842,2016-1116,2016-1115
• Citation: 866 F.3d 1330
• Parties: ROMAG FASTENERS, INC., Plaintiff-Cross-Appellant v. FOSSIL, INC., Fossil Stores I, Inc., Macy's, Inc., Macy's Retail Holdings, Inc., Defendants-Appellants Dillard's, Inc., Nordstrom, Inc., The Bon-Ton Stores, Inc., The Bon-Ton Department Stores, Inc., Belk, Inc., Zappos.com, Inc., Zappos Retail, Inc., Defendants
• Court: U.S. Court of Appeals — Federal Circuit

866 F.3d 1330

ROMAG FASTENERS, INC., Plaintiff-Cross-Appellant

v. FOSSIL, INC., Fossil Stores I, Inc., Macy's, Inc., Macy's Retail Holdings, Inc., Defendants-AppellantsDillard's, Inc., Nordstrom, Inc., The Bon-Ton Stores, Inc., The Bon-Ton Department Stores, Inc., Belk, Inc., Zappos.com, Inc., Zappos Retail, Inc., Defendants

2016-1115

2016-1116

2016-1842

United States Court of Appeals, Federal Circuit.

Decided: August 9, 2017

Jonathan Freiman , Wiggin and Dana LLP, New Haven, CT, argued for plaintiff-cross-appellant. Also represented by Tonia A. Sayour, Norman H. Zivin , Cooper & Dunham, LLP, New York, NY.

Lawrence Brocchini , Reavis Parent LLP, New York, NY, argued for defendants-appellants. Also represented by Jeffrey E. Dupler , Gibney Anthony & Flaherty, LLP, New York, NY; Lauren Albert , The Law Offices of Lauren S. Albert, New York, NY; Nicholas Geiger , Cantor Colburn LLP, Hartford, CT.

Before Newman, Dyk, and Hughes, Circuit Judges.

Opinion concurring-in-part, dissenting-in-part filed by Circuit Judge Newman.

Dyk, Circuit Judge.

Romag Fasteners, Inc. ("Romag") owns U.S. Patent No. 5,722,126 ("'126 patent") on magnetic snap fasteners, which it sells under its registered trademark, ROMAG, U.S. Trademark Reg. No. 2,095,367 ("'367 trademark"). Romag sued Fossil, Inc. and various retailers (together, "Fossil") for, inter alia , patent infringement, trademark infringement, and violation of the Connecticut Unfair Trade Practices Act ("CUTPA") in the U.S. District Court for the District of Connecticut ("district court"). The jury returned a verdict for Romag, finding that Fossil had engaged in patent and trademark infringement and in unfair trade practices. A two-day bench trial resolving other issues followed, after which the district court entered judgment on the jury verdict. This court affirmed the judgment of patent and trademark infringement; other aspects of the judgment were not appealed. See Romag Fasteners, Inc. v. Fossil, Inc. , Nos. 2014-1896, 2014-1897, 686 Fed.Appx. 889, 2017 WL 1906904 (Fed. Cir. May 3, 2017) (" Romag II ").¹

Romag sought attorney's fees under the Patent Act, 35 U.S.C. § 285, Lanham Act, 15 U.S.C. § 1117(a), and CUTPA. The district court granted fees under the Patent Act and CUTPA, but not under the Lanham Act. Fossil appeals and Romag cross-appeals. We vacate and remand.

BACKGROUND

Romag owns the '126 patent and the '367 trademark, which are both directed to magnetic snap fasteners. Romag licensed the '126 patent and the '367 trademark to a Chinese manufacturer, which supplied authentic ROMAG magnetic snaps for use in handbags manufactured and distributed by Fossil. In 2010, a batch of Fossil handbags appeared to contain counterfeit ROMAG magnetic snaps, which led Romag to sue Fossil for, inter alia , patent and trademark infringement and violation of the CUTPA. The details of Romag's infringement suit are described in our prior opinion, Romag I , 817 F.3d at 783–84. The jury found Fossil liable for patent and trademark infringement, as well as for engaging in unfair trade practices under the CUTPA. The patent and trademark infringement verdicts were appealed, and we affirmed the judgment of liability. Id . After the trial on the merits, Romag requested attorney's fees under the Patent Act, Lanham Act, and CUTPA.

Under the Patent Act and the Lanham Act, "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285 ; 15 U.S.C. § 1117(a). In Octane Fitness, LLC v. ICON Health & Fitness, Inc. , ––– U.S. ––––, 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014), the Supreme Court held that under 35 U.S.C. § 285, "an ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party's litigating position ... or the unreasonable manner in which the case was litigated ..., considering the totality of the circumstances." 134 S.Ct. at 1756.

Applying the Octane standard, the district court found that Romag was entitled to attorney's fees under § 285 of the Patent Act because Fossil did not "withdraw [anticipation and obviousness] defenses with prejudice until after trial," and because Fossil's "patent invalidity defense of indefiniteness bordered on frivolous." J.A. 6. The district court also found that Fossil's non-infringement position (as opposed to its invalidity position) was not "so frivolous or groundless as to justify an award of fees." J.A. 5. Finally, the district court declined to consider Romag's conduct as part of the totality of circumstances because it had already penalized Romag for the timing of Romag's infringement suit and Romag's misconduct during the TRO filing. The district court concluded that it saw "no need to further sanction Plaintiff by denying an award of fees in this case." J.A. 7.

With respect to the Lanham Act, the district court applied the prevailing Second Circuit precedent with respect to 15 U.S.C. § 1117(a) that "allows recovery of a reasonable attorney's fee only on evidence of fraud or bad faith." Louis Vuitton Malletier S.A. v. LY USA, Inc. , 676 F.3d 83, 111 (2d Cir. 2012) (citations, quotation marks, and alterations omitted). Under this standard, the district court found that "in the absence of bad faith, fraud, or willfulness on part of the Defendants, this case is not ‘exceptional’ within the meaning of the Lanham Act and Plaintiff is not entitled to recover its reasonable attorney's fees." J.A. 9. The district court also awarded Romag attorney's fees under the CUTPA.

Fossil appeals the award of fees under the Patent Act. Romag cross-appeals the denial of fees under the Lanham Act. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

We review a district court's grant of attorney's fees for an abuse of discretion. Highmark Inc. v. Allcare Health Mgmt. Sys., Inc. , –––U.S. ––––, 134 S.Ct. 1744, 1747, 188 L.Ed.2d 829 (2014) (Patent Act standard); Milo & Gabby LLC v. Amazon.com, Inc. , 693 Fed.Appx. 879, 882, 2017 WL 2258605, at *3 (Fed. Cir. May 23, 2017) (Lanham Act standard). A district court abuses its discretion if it rules based "on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990).

DISCUSSION

I

We first address Romag's contention that the district court erred in not awarding attorney's fees under the Lanham Act, and that the Octane standard applies to both the award of fees under the Patent Act and under the Lanham Act. The district court here concluded that although this "case is ‘exceptional’ under the more lenient Patent Act standard announced in Octane Fitness , it d[id] not find that Defendant acted fraudulently or in bad faith [under the Louis Vuitton standard] ... with respect to trademark infringement ... to recover its reasonable attorney's fees under" the Lanham Act. J.A. 9. We conclude that the district court erred and that the Octane standard applies to the Lanham Act.

Before Octane , the Second Circuit allowed recovery of attorney's fees under 15 U.S.C. § 1117(a) only if there was bad faith or willful infringement on the part of the defendants. See Louis Vuitton , 676 F.3d at 111. The question is whether this standard survives after Octane . There have been no Second Circuit decisions on this issue since Octane .² In Romag I , we followed the prevailing Second Circuit rule with respect to the award of infringer profits under the Lanham Act, after finding that there were no Supreme Court cases on this issue. See 817 F.3d at 785. Here, however, there is intervening relevant Supreme Court authority which, we think, would lead the Second Circuit to follow other circuits which have held that the Octane standard applies to the Lanham Act. See Badalamenti v. Dunham's, Inc. , 896 F.2d 1359, 1362 (Fed. Cir. 1990) ("[I]f the regional circuit court has not spoken, we must predict how that court would decide the issue....").

Since Octane was decided, the Third, Fourth, Fifth, Sixth, and Ninth Circuits have all held that the Octane "Court was sending a clear message that it was defining ‘exceptional’ not just for the fee provision in the Patent Act, but for the fee provision in the Lanham Act as well." Fair Wind Sailing, Inc. v. Dempster , 764 F.3d 303, 315 (3d Cir. 2014) ; see also SunEarth, Inc. v. Sun Earth Solar Power Co. , 839 F.3d 1179, 1181 (9th Cir. 2016) ; Baker v. DeShong , 821 F.3d 620, 623–24 (5th Cir. 2016) ; Slep-Tone Entm't Corp. v. Karaoke Kandy Store, Inc. , 782 F.3d 313, 318 (6th Cir. 2015) ; Georgia-Pacific Consumer Prods. LP v. von Drehle Corp. , 781 F.3d 710, 721 (4th Cir. 2015). Indeed, no circuit has specifically considered Octane and then declined to apply it to the Lanham Act.

This is unsurprising, as the language of the Patent Act and the Lanham Act for attorney's fees is identical. Both statutes provide that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285 ; 15 U.S.C. § 1117(a). "[W]hen Congress uses the same language in two statutes having similar purposes, ... it is appropriate to presume that Congress intended that text to have the same meaning in both statutes." Smith v. City of Jackson , 544 U.S. 228, 233, 125 S.Ct. 1536, 161 L.Ed.2d 410 (2005). In fact, in determining what constitutes an "exceptional" case under the Patent Act, the Octane Court looked to Noxell Corp. v. Firehouse No. 1 Bar–B–Que Restaurant , 771 F.2d 521, 526 (D.C. Cir. 1985), a Lanham Act case, explaining that "the term ‘exceptional’ in the Lanham Act's identical fee-shifting provision, 15 U.S.C. § 1117(a), ... [also] mean[s] ‘uncommon’ or ‘not run-of-the-mill.’ " Octane , 134 S.Ct. at 1756.

The legislative history of 15 U.S.C. § 1117(a) further supports using the same standard. The Senate Committee Report amending the Lanham Act to allow recovery of attorney's fees—changing the rule enunciated in the Supreme Court decision Fleischmann Distilling Corp. v. Maier Brewing Co. , 386 U.S....